(Post) Keynesian alternative to inflation targeting

While the mainstream policies can not be surpassed in the enchanted ‘optimizable’ world, (Post) Keynesians have to resign themselves to manage without magic wand in the uncertain real world. The paper discusses the monetary rules proposed in the recent Post Keynesian literature. It argues that the long-term interest rate is too imperfectly controlled for such rules being feasible. Consequently, the quest for credibility is irrelevant, for it makes not much sense to wonder whether authorities will honour their commitment on an unfeasible ideal target. The right question is whether authorities pursue convincing objectives so as to move the conventional expectation of the future (and the related interest rate) towards full employment. It is a matter of confidence. The basic principles involved in such an approach to economic policy are discussed.